On March 12, 2018, the Committee on Payments and Markets Infrastructures and the Markets Committee of the Bank for International Settlements issued a joint report that considers two types of central bank digital currency: (i) a wholesale CBDC for use in financial markets and limited to select financial institutions; and (ii) a general purpose CBDC that would be available for use by the public. The report analyses the implications of both types of digital currency in the core central banking areas of payments, monetary policy implementation and financial stability.
As regards wholesale CBDCs, the report finds that while they might be useful for payments, more work is needed to assess their full potential. The report also finds that a wholesale CBDC would not alter the basic mechanics of monetary policy implementation, but that its transmission could be affected. The report states that a general purpose CBDC could have wide-ranging implications for banks and the financial system and could also have effects on the efficiency of financial intermediation. As a result, the report concludes that any jurisdiction considering the launch of a CBDC should carefully and thoroughly consider the implications before making any decision.
The joint report has been published in advance of the meeting of G20 central bank governors and finance ministers, scheduled for March 19–20, 2018, which, among other things, proposes to discuss the technology behind cryptocurrencies.
The joint report is available at: https://www.bis.org/cpmi/publ/d174.pdf and the press release is available at: https://www.bis.org/press/p180312.htm.
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